After a period of uncomfortable tension, the British and Russian owners of TNK-BP came to an agreement Thursday that postulates a restructuring of the oil giant’s board and an eventual IPO “at an appropriate future point.” The executive management of TNK-BP, a Russia-based partnership between London’s British Petroleum and Alfa Access-Renova (AAR), a team of Russian investors, had suffered through months of debate and media speculation as to the stability of the oil venture
Under the agreement, TNK-BP’s American CEO Robert Dudley will step down and be replaced by “a Russian-speaking candidate with extensive Russian business experience.” Additionally, the TNK-BP board, which currently consists of four representatives from both BP and AAR, will be augmented with three independent directors, bringing the director count to 11.
BP chairman Peter Sutherland lauded the agreement: “It will create a stable base from which to grow the joint venture to the benefit of everyone involved, including the Russian state for which strong capital investment and continued technical innovation to boost declining oil output are so important.”
The agreement comes on the heels of a prolonged squabble within TNK-BP that threatened to dismantle the partnership. Those on the Russian side were dismayed at the huge profits BP was making at the expense of Russia’s valuable oil reserves. The success of the partnership was threatened by the prospect of nationalization, which would have decreased Russia’s attractiveness as a foreign investment site, and decimated Russia’s image in light of the recent war in Georgia.
TNK-BP posted record profits of $4.7 billion in the first half of 2008, more than double the $2.1 billion achieved in the first half of 2007. The company was founded in 2003.